There are many things higher education could get along quite happily without, but cash isn't generally one of them. But for the Cambridge-MIT Institute (CMI), one could make an exception.

The collaborative venture between Cambridge University and the Massachusetts Institute of Technology was launched in November 1999 to exploit research to create hi-tech businesses and wealth for the UK. The project appeared to be Gordon Brown's own baby - though no doubt his close relationship with Sir Alec Broers, Cambridge's vice-chancellor at the time, influenced his thinking. The chancellor committed £65.1m of public money to CMI over a five-year period through the auspices of the Department of Trade and Industry.

But in many ways the cash has turned out to be something of a poisoned chalice. First, it predictably aroused the envy of every other university, which felt the deal should have gone to competitive tender. But more important, it raised the levels of expectation about what CMI could achieve. When that much money goes to one university, people want transparency, accountability and results.

By and large, CMI has delivered on the first two - though there are critics who still demand more. What it hasn't really produced so far is the results. At least not the sort of results all the hype had suggested. And this has been CMI's biggest problem. To justify its position, it was virtually forced to oversell itself, with disappointment the almost inevitable outcome.

Insiders say one of those most disappointed is Gordon Brown himself, who had presumably been looking for MIT-like returns. Companies founded by MIT graduates include Hewlett-Packard and Intel, and the university's spin-off companies have annual worldwide sales of $232bn (£147bn).

What CMI has actually come up with is good solid stuff: its DSpace programme should help to create a compatible digital archive between British and US universities; its Praxis programme has established technology transfer courses for university staff; it has also set up Connections, an undergraduate entrepreneurship programme. But none of it is exactly earth-shattering or guaranteed to revolutionise the competitiveness of UK plc.

There was a general feeling in the academic world that if CMI hadn't exactly stalled, it had become becalmed and lacking in direction - a feeling enhanced late last year when the two directors, MIT's John Vander Sande and Cambridge's Alan Windle, unexpectedly resigned. At the time, a spokesperson for CMI explained their departure as part of the natural evolution of the company, but this was curious, since neither Vander Sande nor Windle had previously given any hint that their appointments were anything less than permanent.

The appointment of Professor Ed Crawley as MIT's executive director and New Zealander Professor Michael Kelly as his Cambridge counterpart back in January suggests the latter. The two men try to maintain the patina of "business as usual", but Crawley can't help smiling as he says: "It's fair to say that the appointment processes followed the norms of both universities." I can't help smiling either, as both universities are renowned for opacity and mysteriousness.

"At MIT there's very much a consensual approach," Crawley continues. "The leadership decided who might be the right sort of candidate and conducted the interviews accordingly." "I did see an advert," Kelly chips in, "but a couple of people did suggest to me that I might like to apply."

First impressions suggest the great and the good have chosen wisely. Crawley is an MIT success story: an academic who founded a profitable spin-off company patenting vibration reduction technology. Kelly has likewise put in the hours in both academia and business. He's taught at both Cambridge and Surrey and still found time to spend 11 years at GEC, developing semiconductor technology. In short, both men are not only at the cutting edge of academic research, they have also successfully brought that research to market - the perfect fit for CMI.

Neither man is keen to rubbish the previous regime, nor even to hint that mistakes might have been made. But it's not hard to see they are keen to draw a line in the sand between the past and the future. "When you set up a venture such as CMI," says Crawley, "it is only natural that you fund a wide variety of small-scale, different projects to find out what works and what doesn't. But there comes a time when you have to consolidate."

That time has come. For the past three months Kelly and Crawley have been working to redefine and re-evaluate what CMI is about, to establish the parameters of what they can and can't realistically do, and to refocus their attention accordingly. The first concrete result is a new mission statement, published this month, which set out CMI's goals of "enhancing the competitiveness, productivity and entrepreneurship of the UK economy, by enhancing the effectiveness of knowledge exchange between university and industry, educating leaders, creating new ideas and developing programmes for change in universities, industry and government".

Much of the essence of this statement may be similar to the previous one, but the difference is in the detail and the nuance. The new statement is more pragmatic, more down to earth, more humble - and, more to the point, more realistic. With the new mission has come a call for new proposals for CMI to consider.

"We want them to reflect our new focus," Crawley continues, "but we are also looking to fund fewer, larger projects. We have learnt from our investments in the start-up phase, and we are now looking at how to get the maximum benefit from our time and resources."

This new approach should head off the sort of criticism that had been aimed at the previous directors, who many felt had been searching around desperately for projects to fund - and in the process giving the green light to some indifferent proposals - rather than having a clear idea of what they wanted.

But they may find it harder work to deflect the ongoing suspicions that CMI remains a better deal for MIT than Cambridge, not least because £13m of public money has already departed Stateside to fund US research.

"All the programmes we fund are intended to impact largely in the UK," says Crawley. "I've been amazed by the commitment in the US to the UK economy." Asked to be more specific about individual research projects, he demurs slightly. "Research takes a long time for the effects to filter through. It's more appropriate to the wider view. For instance, you can already see the results of international cooperation in Praxis, Connections and our undergraduate research schemes."

Kelly and Crawley want to increase CMI's involvement with Science Enterprise Centres and the National Competitiveness Network, but will not be chucking their money about carelessly. "Our focus will not be on the funding per se," Kelly points out, "but on what's delivered."

Getting disparate groups to get together may also be hard work. Many academics are extremely proprietorial about their research - especially when funding is tight. "I disagree," says Kelly. "Academics are increasingly realising you have to work as a team and have a holistic approach. We don't want to stifle independent blue-skies thinking; rather we want to provide new routes for researchers to follow."

"Cultural change is a slow process," Crawley chips in. "Our aim is to provide models of how things might be done, to create examples and help people understand why some are successful and some aren't."

Both men refuse to be drawn on CMI's future. "In this quarter we want to concentrate on the strategies in hand," says Kelly. "In the short term, over the next six months, our main aim is to provide some good news stories for Gordon Brown."

Which brings us pretty much back to where we started, with the Treasury's £65.1m. Clearly the pressure is on, not just to account for the cash but to show it has been spent wisely. The chancellor may have other things on his mind in the near future - Iraq, the euro and the leadership - but even so, Kelly and Crawley are still going to have their work cut out. None of the new projects they hope to fund are likely to have got off the ground, and the old ones - worthy as they may be - still don't over-impress in global terms.

When CMI was first established, it was asked to find £16m in corporate funding to go alongside the £65.1m from government. To date it has raised more than £12m, which puts it comfortably on or even ahead of target to reach the final figure by the end of next year. This suggests an easier way forward. Wouldn't it be simpler if the government ended its involvement when the final tranche of cash has been drawn down?

"We're restricting our focus to the next two quarters," says Kelly. "We'll work on future strategies after that." Which is a polite way of saying mind your own business.

But much as CMI might be tempted to get its mitts on more public money if it turns out to be on offer, a better option might be to focus its energies entirely on raising money from the private sector. That way expectations can be managed realistically, and CMI is accountable only to its shareholders, not to the country. And it just might find that, with the pressure off, it can evolve into the entity that was first imagined. It's still a big task - but with Crawley and Kelly at the helm, it has a better than even chance.